What is the best way for economy to bounce back?

Also, there seems to be a unanimous agreement among those interviewed, that vaccinating a critical number of the population will help the economy become more resilient.

One of advocate of such position is the Permanent Secretary of the Ministry of Health, Dr Diana Atwiine. She is not alone, though.

Speaking at the launch of the 18th Edition of the Uganda Economic Update, the World Bank Group country manager for Uganda, Ms Mukami Kariuki, noted that the country is likely to still face a stop-start recovery until there is wider coverage of the Covid-19 vaccine to allow full reopening of the economy.

The economy which according to the update, was recovering well up until the second wave of Covid-19 infections and subsequent lockdown in May 2021, will benefit from vaccinating a critical mass, estimated at 5 million or more Ugandans, a number which by the press time was below the anticipated target, according to Dr Atwiine.

She said: “Thus, to ensure an inclusive recovery: faster deployment and widespread coverage of the vaccine is critical.”

She continued:  “Schools need to be opened with safeguards to minimise disease transmission. Micro, small, and medium enterprises must be prioritised and supported to get back on their feet for job creation during the recovery, and prudent and transparent fiscal and debt management must be maintained.”

Should the managers and planners of the economy continue doing “business as usual” the rise in poverty, increased household vulnerabilities, and widening inequalities, predominantly in the education sector, where schools have now been closed for longer than any other country in the world, will remain a fixture in thecountry’s calendar.

Drawing from the theme of the report, Ms Kariuki noted that women who account for majority of micro, small and medium enterprises have been very badly affected by the Covid-19 pandemic. But women’s economic empowerment is key to quickening Uganda’s revival.

“Global experience shows that increasing women’s rates of labour force participation, wage employment, earnings, access to productive assets, and the ability to make independent decisions – brings immediate benefits for women and contributes to more sustained economic growth,” she said.

Setting sights on more vaccination

To underscore the importance of vaccination, one of the authors of the Economic Update, Mr Richard Walker, noted that for Sub-Saharan countries including Uganda to reap fully from reopening the economy must up its vaccination uptake just like in Europe and North America. If not, it will find itself trapped in a stop-start quagmire.

To put that into perspective, Dr Atwiine while discussing the World Bank report, said vaccination does not prevent contraction of Covid-19, but its effects will be mild and manageable. For that, there will be no need for lockdowns to suppress the spread. But without the hedge of a vaccine, the effect of the pandemic on the human body is likely to be fatal, necessitating tough containment measures, including an economic shutdown despite its massive toll on livelihoods.

According to Mr Walker who is also a senior World Bank economist, the anticipated reopening of the economy will come at a time when the country’s economic growth has slumped from slightly more than 4 per cent to three per cent downwards, with agriculture which was the safety net among the declining sectors for the first time in the last two or so years.

Simultaneously, the economy cannot generate enough revenue as interest payments finally exceeded government spending on health and education.

Some ways out, according to Mr Walker, will depend on how prudent the government conducts its business, including making better use of concessional debts as well as matching projects to appropriate financing.

Buy Uganda, Build Uganda

The idea of reopening the economy full blast even in the wake of some domestic terrorism threats that has rocked part of the central business district recently does not seem to have any bearing on the opinions of many analyst.        

And for as long as MSMEs, according to Economic Policy Research Centre (EPRC) Senior Research Fellow, Dr Madina Guloba, remain innovative by way of tapping into the benefits of available virtual technology, they will accrue the full benefit of the economy once fully reopened.

For the meantime she is of the view that SMEs that have been hit hard should consider tapping into the funding made available by the government to institutions such as Uganda Development Bank and Microfinance Support Centre to re-capitalise their businesses.

And where this is not possible, she encouraged SMES to partake any form of stimulus package the government has on offer if it can help them survive the pandemic tide. And importantly, this, she says is the time to for the government to implement buy Uganda, build Uganda policy to its logical conclusion as it is the most deserved moment.       

Ms Susan Khainza, a Chartered Financial Analyst (CFA), said: “There is no society that can survive in such restrictive conditions forever.”

She continued: “Children need to go back to school to gain the skills required to provide labour in future, parents need to provide for the next generation that is important for the continuation of society.

“People need to provide for their basic needs, save for the future, pay taxes and have purchasing power to buy goods and services which is necessary to keep companies going and in turn provide jobs and also pay taxes.”

Ms Khainza argues that the longer the economy remains restricted the higher the chances of unemployment, poverty and frustration deepens, providing a fertile ground for recruitment into crime and radicalisation of potential terrorists.

‘We are not an Island’

According to the executive director for Centre for Budget and Tax Policy (CBTP), Mr Patrick Kiconco  Katabazi, Uganda is not an island, given that her peers in the region such as Tanzania, Kenya and Rwanda are fully opened.

He said: “Neighbouring countries have all opened up their economies for business. So it doesn’t make economic sense for Uganda to remain closed.”

Liquidity challenges

The Federation of Small and Medium Sized Enterprise (FSME), executive director, Mr John Walugembe, says the reopening of the economy, in many ways, solves the problem of many struggling business although he stress that on its own is not sufficient to propel the economy to the pre-Covid 19 levels. And because of that he told Prosper Magazine that it is incumbent upon the government to do more for businesses beyond deferring taxes.

For businesses and the economy to regain its footing, Mr Walugembe said the most pressing problem of liquidity constraint must be sorted, explaining why the small business recovery fund (SBRF) allow up to shs100 million to be advanced to an SME for recovery purposes. And this is without necessarily providing a physical collateral to the financiers, urging the SMEs to partake this arrangement that he describes as an important stimulus package.